TCS short collection demand fails where records show tax was collected and deposited despite reconciliation mismatch.

Where quarterly TCS returns, reconciliation statements and supporting records showed that tax on scrap sales had already been collected and deposited, a demand for alleged short collection under section 206C(6A) read with section 206C(7) was held unsustainable. The mismatch relied on by the Assessing Officer arose from differences between the audited profit and loss account and TCS return figures, including treatment of roll scrap sale and duty and tax components. On the material available, there was no factual default in collection or payment of TCS, and the impugned demand was deleted in favour of the assessee.

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Issues: Whether the assessee was liable to be treated as in default under section 206C(6A) read with section 206C(7) of the Income-tax Act, 1961, and whether the demand raised on account of alleged short collection of tax collected at source was sustainable.

Analysis: The assessee produced the quarterly TCS returns, reconciliation statement, and supporting details showing that tax had already been collected and deposited on the relevant scrap sales. The figures placed on record indicated that the amount treated as short collection by the Assessing Officer arose from a mismatch between the audited profit and loss account and the figures reported in the TCS return, including treatment of roll scrap sale and duty and tax components. On the material available, the Tribunal found that there was no factual default in collection and payment of TCS warranting the impugned demand.

Conclusion: The demand under section 206C(6A) read with section 206C(7) was not sustainable and the issue was decided in favour of the assessee.

Final Conclusion: The assessee succeeded and the impugned tax demand was deleted.

Ratio Decidendi: Where the record shows that tax collected at source has already been collected and deposited, a demand for alleged short collection cannot be sustained merely because of a reconciliation mismatch between return figures and book figures.

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